Friday Mar 18, 2016

Five Competitive Killers in the Manufacturing “Engineer to Order” Process

Call it a streetcar not desired. In September 2015, Seattle, Washington’s Department of Transportation issued penalties of nearly $800,000 against Czech company Inekon for failing to meet deadlines in delivering new, customized street cars to the city after a series of software glitches, propulsion problems, water damage in six out of seven inverters, and unfinished items like way-finding graphics and the customer information system. As of year’s end, the first street car was scheduled to arrive two years late -- not a glittering endorsement for the company.

#1 Making the customer wait – not to mention the penalties that come with those delays -- is just one of several competitive killers that manufacturers face in the Engineer-to-Order business.

ETO projects, those highly customized, small volume designs that require unique materials and sometimes last months or years, are perhaps the most vulnerable to competitive killers due to their very nature. Designs change, delivery of specialized materials could be delayed, technology updates, things could go wrong. Manufacturers that venture into ETO projects must be ready to slay these competitive killers.

#2 Rework and failures

Changes in design are inevitable in ETO projects, but lapses in transparency and communication between customers, partners and the manufacturer are not. The need for unnecessary rework hits the bottom line.

Boeing knows this all too well. In July 2015, the aerospace manufacturer took yet another charge against its USAF aerial refueling tanker program, the KC-46A. This time the price tag was $536 million after taxes, bringing the total charges to date to more than $800 million, according to one report. The KC-46 tanker is being designed, developed and tested under a fixed-price Engineering, Manufacturing and Development contract.  

The additional charges, according to Boeing’s president and CEO, reflect higher estimated engineering and manufacturing costs to complete development, certification and initial production of the tanker aircraft, while holding to the program schedule for initial production deliveries in 2017. While Boeing had improved its processes after producing similar tankers for Italian and Japanese air forces, the fueling system is new to the USAF and different from the previous tankers.

#3 Overproduction

Even when an ETO project appears to be running smoothly, there are other aspect of ETO projects that can go south. Companies that manage more than one ETO project at a time can face overproduction due to a lack of oversight and coordination across projects. For instance, project managers arbitrarily set a pre-define margin of safety, but smaller ETO projects can tolerate a smaller margin of safety. Another pitfall to avoid -- if production starts too early, designs can change and require further production – adding to the waste.

#4 Too much inventory

Multiple ETO projects can also lead to unnecessary inventory. Procurement specialists sometimes buy larger quantities than they need to meet minimum order quantities, or they want to take advantage of quantity discounts, but in reality the true carrying or holding costs can often be greater than what was originally saved.

#5 Not automating the entire ETO project management process

Manufacturers need visibility across their entire project portfolio to determine optimal bid prices, better estimate delivery dates, reduce lead times, and be better able to accommodate change orders without compromising margins or delivery schedules. Updates should also be communicated regularly with the client and suppliers to keep inventory and production on track.

Oracle Primavera’s enterprise solution addresses the challenges of the ETO process. It can help ETO businesses make changes quickly, collaborate with stakeholders easily, understand where they are in the process, manage resources so they’re ready when needed, and ultimately deliver the product on time and on budget.

In highly specialized manufacturing, customer satisfaction is key. Oracle Primavera allows manufacturers to build tighter relationships through open transparency and repeatable success. Check out our White Paper, “Building a Profitable Engineer-to-Order Business,” to learn more.

For more information on Primavera’s Engineer-to-Order Solution visit www.oracle.com/goto/eto

Monday Mar 07, 2016

Two Worlds Colliding

By: Krista Lambert, Director, Engineering & Construction Strategy, Oracle Primavera

Bringing together the best of both worlds

Site foremen are formidable people. You don’t want to feel the force of their frustration. When someone else’s mistake plays havoc with their plans or makes them miss deadlines, it can create unbearable situations.

But you can avoid frustrating your foremen with short interval planning. It’s a technique used in Lean Construction, designed to flush inefficiency out of the system. The technique relies on frequent and open collaboration on the job. The idea is that short-term plans are created daily to adapt to changing circumstances, ensuring employees are not left scratching their heads with nothing to do.

But it has its shortcomings.

It could miss important dependencies in the project which, if ignored, could delay completion. Since the 1940s the critical path method has been developed to seek out these dependencies, showing project managers where to focus their energies if they want to avoid being late.

And yet the critical path method is often set against short interval planning as if project managers and planners must pick one method or the other to succeed. But this doesn’t have to be the case.

The tools and technologies to bring the two approaches together – and get the best from both – are available today. The reality is that an open approach can help you stay in touch with the project whatever is thrown at you at any stage of the project giving you greater control.

To discover more, read our latest business brief.

Thursday Mar 03, 2016

How can I deliver better projects in my Smart City?

By: Werner Maritz, Public Sector and Infrastructure Industry Strategy

The world is watching - 10 Game Changing Characteristics

Globally city managers are faced with an ever-increasing city population and a decrease in financial and human resources to deliver adequate services across the city region. The challenge of ensuring the city’s sustainability must be seen against a backdrop of increased environmental and social awareness, economic pressure and competition for public and private investment in and around the city. City managers are often faced with challenges related to ensuring basic human rights, dignity, safety and security for the poorest of residents while delivering on the life style demands and expectations from the richest of residents. Often these diverse groups are living in close proximity of each other and resources must be allocated and shared. Given this familiar situation, city management need to prioritize capital and social investment to deliver on the strategic objectives of the city, a fine balancing act indeed.

City managers need to take a holistic approach in planning the future growth and improvements across the city to ensure not only cost-effective services delivery of and new infrastructure but also ensure synergy across the city responsibilities related to Built Environment, Economic and Social Infrastructure to ensure the economic, environmental and social sustainability of the city. From breaking down the traditional silo approach of the City departments to having real-time insight of the transversal infrastructure demand and backlog across these departments is critical to effective investment planning in the city. Eliminating duplication of effort between departments and leveraging synergy to achieve common objectives is key to a successful Smart City Transformation Roadmap.

Leveraging continuous technology advances and improving cost-benefits ratio of technology to improve the productivity of the city’s infrastructure, city managers face an ever-increasing portfolio of new projects to be delivered across the city. Often these are complex, long term programs consisting of multiple sub-projects to plan, co-ordinate, and implement with due regard to operational effectiveness improvements in the process. Monitoring performance and taking timely corrective action is critical in delivering these long-range programs on time and within budget in a complex delivery environment with multiple stakeholders.

Effectively transitioning the city’s new assets into the operations and maintenance phase is critical to ensure early value generation from these investments, and to manage and maintain these assets at their design capacity and capability over many years to come.

 

Oracle Primavera Smart City Projects Solution

A significant challenge in the implementation of Smart City Transformation Roadmaps across the world is related to securing adequate funding for the projects on the roadmap. Development Financing Institutions (DFI) and potential Public Private Partnerships (PPP) indicate that adequate funding is available to realize the Smart City Transformation goals but they have two main investment decision considerations:

  • The availability of investment grade project opportunities, and
  • The assurance that adequate financial control and governance processes are in place during the project implementation phase.

The Oracle Primavera Smart City Projects Solution delivers 10 characteristics, which will significantly contribute to meeting these requirements:

1. Implement a detailed project portfolio management process to show the alignment of the investment opportunity with the overall strategic objectives of the city. Track the development and approval of deliverables across project development phases. Show how the business case for the project supports the longer term vision of the Smart City transformation roadmap and how benefits realization will be tracked once in operation;

2. Establish a standard platform for program and project set-up, project management and project close-out processes. Ensuring predicable and repeatable project processes and structures facilitate effective project administration;

3. Set a standard for project performance monitoring and reporting. Standard performance reporting across all projects enables decision makers to take early corrective action based on real-time metrics indicating deviation from planned cost and schedule objectives. Poor performance from contractors and suppliers is a leading cause of project failure

4. Enforce project and financial governance processes through configurable workflow for change requests and financial approvals. Ensure the auditability of actions taken by project team members and tracking of contractual deliverables;

5. Implement a formal project scope and contract change management processes. Align the interim contract payments with a formal schedule of values under the contract terms and conditions. Only make payments for work actually completed and certified;

6. Enable electronic correspondence management, document tracking, document control and electronic document handover across all project team members, city operating divisions and external stakeholders. Create a full electronic record of the project to ensure proper project hand-over, close-out and dispute resolution support;

7. Leverage transactional control data in the City’s ERP to enable informed cost and cash-flow management and forecasting. Integrating the Oracle Primavera Smart City Project Solution with the City’s ERP solution will promote operational efficiency and financial data integrity.

8. Implement a formal program and project risk management platform, integrated with the cost and schedule management of the project. Effective program and project risk management is one of the most under-estimated forward looking management tools within the overall project governance framework;

9. Establish a collaborative environment between the city project owner’s team, engineers, consultants, main contractors and sub-contractors. Clear and timely communication between team members reduce project schedule delays due to delayed decisions caused by slow communications;

10. Implement a formal post contract award management environment in support of the chosen contract format. This will facilitate contracts administration, contract change management, interim payment certification, partial and full contract deliverables handover and acceptance. Ensuring compliance with the conditions of the contracts between the city and the contractor will reduce the project cost growth due to uncontrolled contract changes. Preventing litigation related to contested contract changes is an effective manner to contain cost growth and wasteful expenditure on a project

 

Easy to deploy

In todays fast passed city environment the deployment of integrated management systems need to provide the agility the Smart City Transformation Roadmap demands. Unfortunately city IT managers often face challenges to deploy any form of integrated management systems to stakeholders outside of the city administration. In part, this may be due to cost consideration, the city’s procurement policies or data security considerations.

The Oracle Primavera Smart City Projects Solution is a fully web based solution which can be deployed as a Software-as-a-Services (SaaS) solution from Oracle or as an on-premise solution in the city’s own IT environment. The Oracle Primavera solution is designed for the extended enterprise. Cost effective licencing models put the solution within reach of all project stakeholders. The user access and security model is designed to enable deployment outside of only the city administration, allowing the operational efficiencies of a truly integrated project delivery platform across the city and its stakeholders.

The Oracle Primavera solution supports the use of mobile devises to facilitate a productive workforce across the city. Leveraging the city’s communication networks allow project team members and stakeholders to access project planning and contract information, status activities and contracts, and access reports and dashboards while on the go from their mobile devices.

 

1PPM for Intermodal Transportation & Infrastructure Organizations: Select, Manage and Maintain Transformative Projects. Aberdeen Group, March 2015

 

Monday Feb 29, 2016

Solve the Decommissioning Dilemma

By: Guy Barlow, director, industry strategy, Oracle Primavera

Decommissioning might be a rather dry phase of the asset lifecycle, but it is essential. And, at the same time, it is becoming increasingly costly and risk-laden – in 2014, total decommissioning spending came to between $1.6 and $1.8 billion.[1] For decades, it has been relegated to afterthought status in many industries, including the oil and gas (O&G) sector. Businesses instead have focused the bulk of their attention on bringing new projects online as rapidly and cost-effectively as possible to optimize production volumes and maximize revenue.

Times are changing, however. According to Decomworld’s Offshore Decommissioning Report, the drop in crude oil prices has shifted perceptions on decommissioning activity, and with this, the number of decommissioning projects is expected to rise as high as 250 in 2015 and 2016, from 210 in 2014. Federal regulations and declining shelf production have caused decommissioning projects, specifically in the Gulf of Mexico, to see record levels of activity, generating roughly $9 billion in spending and, as of January 2015, the market is valued at $26 billion.

As a result, O&G companies, as well as their counterparts in other asset-intensive industries, are rapidly realizing the need to better plan for and manage the final mile of their assets as carefully as they do their initial construction.

Roadblocks on the Path to Success

Aberdeen Group reported that less than 25 percent of asset-intensive organizations have a plan in place for decommissioning assets. Several factors are driving this surprising statistic:

  • Increased Focus on New Assets. New assets and infrastructure are vital to ensuring the scale and reliability needed to achieve agility in the volatile O&G industry. As such, enterprises are very focused on completing these new projects on time and on budget.
  • Asset Lifecycle is Stretched Thin. O&G companies, for example, are looking to squeeze every last drop of productivity out of their assets, especially as markets tighten and prices decline. This often involves extending lifecycles well beyond the original targets.
  • Resources are Limited. Enterprises today must frequently choose between applying skilled resources on new projects as opposed to using them to plan for or proceed with decommissioning. And, as decommissioning activity is expected to surge in the next year, there will be more pressure on offshore equipment resources causing industry experts to take a more collaborative approach to maximize resources with minimal costs.1

Focusing solely on these shorter-term considerations can create formidable challenges in the future—essentially, enterprises are overlooking the considerable opportunity costs, potential operational risks, and financial repercussions associated with a mismanaged decommissioning project.

Last, but Certainly Not Least

Although it’s the last step in the asset lifecycle, decommissioning should be approached with the same deliberation as the design, build, and operate phases as it carries significant risk. And, as the drop in crude oil prices causes the number of structure removals to rise, it is now even more important for O&G organizations to ensure they have an effective approach in place to carry out the decommissioning process.1

So what can O&G companies and other asset-intensive enterprises do? Here are six strategies that our customers have used to ensure successful decommissioning initiatives:

  1. Collaborate Early and Often. Involve all key stakeholders throughout the lifecycle planning process to define and validate project scope and approach. This includes facility managers, line-of-business leaders, risk officers, as well as executive management—and encompasses multiple external stakeholders—contractors, partners, as well as local, state, and Federal regulators who have jurisdiction over the project. It is also important to seek early input from individuals who manage and decommission the asset, as they can provide important insight into design features that can reduce the cost and risk of decommissioning decades later.

  2. Create a Centralized Plan Repository With the Ability to Embed Risk Assessment Into the Plan. These repositories are often the core of enterprise project portfolio management (EPPM) solutions. Organizations can embed risk information into these repositories and the resulting plans, enabling them to prepare and react to unforeseen issues, perform “what if” scenarios, and monitor the status of a project to approve, continue, and optimize decommissioning projects. Having this information repository in place is vital so that organizations have the institutional knowledge to effectively decommission an asset when it has reached end of life.

  3. Optimize Resources. As resources become increasingly scarce and expensive, stakeholders need complete and real-time visibility into the skill sets at their disposal, as well as where and how resources are deployed throughout the organization. It is also critical to standardize procedures for selecting resources and predefine exception processes. Working within this framework, leaders can accurately identify required skills and resources and effectively map them to project requirements, enabling them to avoid delays, mistakes, and cost overruns.

  4. Ensure Real-time Visibility Into Projects and Performance. Leaders require real-time visibility into project performance, including progress and budget adherence, and must be able to share this information with internal and external stakeholders. Clear insight into milestones achieved and missed, status updates, budget versus actual spend, and work breakdown structure updates are essential. With this approach, businesses can better determine and plan effectively for end of life to optimize return on investment.

  5. Equip Managers With Tools Needed to Plan and Execute. Automating the asset lifecycle management process is increasingly essential—the days of spreadsheets and paper-based processes are long gone. Leaders should look for tools like EPPM that can automate processes such as scheduling, costing, project management, reporting, and collaboration. At a strategic level, these changes could open doors to improved strategy execution, operational excellence, and financial performance across the entire enterprise, to ultimately ensure that projects are not only completed within budget and on time, but also to drive long-term value that aligns with business objectives.

  6. Focus on Continuous Improvement. Always take time to assess progress and capture knowledge for future initiatives. Leading enterprises bake continuous improvement into their standard operating procedures for project management and benefit greatly from continued evolution of best practices.

O&G companies, along with other types of asset-intensive enterprises, can set a solid foundation to support current and future customer demands by embracing a holistic approach to asset lifecycle management. With project management best practices, careful planning, and proven methodologies and technology solutions, these organizations can finally put an end to decommissioning distress.


[1] Upstream Intelligence, “Spike in GoM Decommissioning Quickens Need for Deepwater Expertise,” October 5, 2015 http://analysis.upstreamintel.com/deepwater/spike-gom-decommissioning-quickens-need-deepwater-expertise

Tuesday Dec 08, 2015

The Risks of ‘Word of Mouth’

By: Garrett Harley, Director, Engineering & Construction Strategy, Oracle Primavera

Where’s Bob?

When a kitchen appliance isn’t behaving as it should, it’s best to consult the manual. That’s if you can find it. In the digital, searchable, online world, it is easy to forget how much valuable information is hidden away. Until someone really needs it.

Multiply this problem by thousands and the difficulties in the maintenance of large capital assets become clear. Information needed by maintenance engineers might be in the architect’s drawings, the engineer’s calculations or in any documents from thousands of suppliers. It might be in the notepad of Bob, who heads up electrical engineering, his team made some changes to the set-up of the security schematics. Where is he? And where is the information?

The problem is that it might even have been mentioned in any number of project meetings and even the handover meetings between the construction contractors and the owner-operators. But where was the information captured?

With many different specialists (Bob#1, Bob#2, Bob#3, etc) working on a single capital asset, information gets stuck behind ‘tribal’ boundaries and sits in silos. Bob’s scenario is all too frequent and the complexity throughout the project lifecycle is magnified.

A lack of clear, consolidated, searchable data on components, materials and construction techniques can making maintaining buildings highly inefficient. It also creates a risk of the building being poorly maintained. Mistakes here lead to costly reactive work further down the road. It’s not a good place to be.

But there are better ways to manage the hand-over of large-scale capital assets. There are tools available that allow the main contractors to capture all the data in a coherent but flexible workflow. With so many people involved in a large project, keeping track of all the adjustments – it can make maintenance a lot easier, creating massive savings in the lifetime cost of the asset and more to the point – fewer ‘where’s Bob’ moments.

To discover more, read our latest business brief.

Wednesday Nov 11, 2015

Stop Wasting My Time

By: Krista Lambert, Director, Engineering & Construction Strategy, Oracle Primavera

Make better bids, win better work

The average engineering and construction firm only wins one in every four bids for capital asset projects. For a $1 billion company, that’s around $75 million wasted on failed bids every year.

The industry has always worked this way, and some executives will justify the waste as a cost of doing business. But there is another way of looking at it.

Given the costs, it’s no surprise that engineering and construction businesses are picky about the jobs they bid for. The question is, whether they can target more profitable work, improve their chances of winning each bid, or launch more bids with fewer resources? The answer is they can do all three.

Unlocking the value of knowledge

In geographically dispersed businesses, bids are managed autonomously by local teams. Valuable experience and knowledge is often lost to the rest of the organization. This might be based on analysis of opportunities in the marketplace, costings for materials, researching the supply base or understanding a potential client’s wants and needs. There’s a huge opportunity to pool this knowledge across the organization and improve bid quality while lowering cost.

Currently, too many organizations are comfortable with a lack of collaboration which leads to errors and omissions, increasing costs and lowering the chances of success. But tools exist that can ensure data is shared throughout the organization, and readily available to anyone who needs it. And when you’re bidding for new jobs, knowledge is not only power. It’s also profit.

To discover more, read our latest business brief.

Tuesday Jan 13, 2015

The New Face of Project Management: Are Specialized PMOs and Mobile Tech the Future?

PM World Journal - January 2015

Author:  Mike Sicilia, Senior Vice President & General Manager, Oracle Primavera

The face of project management is changing. Economic fluctuation, evolving risk, and increasingly stringent regulations are creating new challenges for project managers. To meet these challenges and ensure the success of diverse projects across the enterprise, organizations must consider new and innovative methodologies and approaches that can inject innovation into processes.

Illuminating these realities, Oracle recently brought together a group of business leaders who revealed insight into two evolving areas: the role of project management offices (PMOs) and the increasing real-time reach of mobile technology. The Enterprise Project Portfolio Management (EPPM) Board – a steering group of senior executives, academics, and industry experts that looks at how C-level executives can successfully prioritize and manage the project portfolio – raised questions over the long-term value of PMOs and the way mobile technology can transform project management.

Read the complete article here.

Thursday Dec 04, 2014

Why New Product Development is so Important to Manufacturers

Written by the Aberdeen Group

Innovation has become critical to the long-term health of a business. No longer can a company rest on its laurels and keep doing “business as usual” you must always be looking at new ways to serve your customers. New products are an organization's most important source of revenue. New products bring in higher sales, increased customer loyalty, and ultimately higher profits. One only needs to look towards Apple back in 2001 when it released the iPod. A great product for its time that was extremely successful, Apple was not satisfied however and continued to focus on new innovative products. Instead they released new products like the iPhone and iPad, which directly contributed to Apple’s market share increasing at the rate that it has.

The data backs up that thinking, as half of the revenue for Best-in-Class companies comes from these new products, a clear gap between their peers (Figure 1).

It is true that the launch of a new product offers an organization's greatest opportunity for increasing revenue and profitability. However, new product development is not a simple, uniform or sequential process. Its complexity and risks arises from its many phases, its many stakeholders, and the intricacy of the product being developed. Increased product complexity, changing consumer demands, market globalization, extended supply chains and design networks, and regulatory compliance are all concerns that affect new product development. Executives that are considering how to improve this complex process must find the right balance between improving execution, efficiency and timeliness with the genius of innovation and problem solving. Executives that tip the balance too far in either direction end up with a great product that is late or a poor product that is on-time: and either makes for a commercial failure.

For those companies looking to improve NPD, read the recent Aberdeen Report on The Hidden Costs of Late Products.

Wednesday Jul 16, 2014

Top three considerations for #PMO deployment best practices

It all starts with good intentions; your good intentions to make a positive impact on the business, your good intentions to help the business become organized, and your good intentions to improve efficiencies and effectiveness. You’re thinking creatively, you’re excited about making positive changes and you’re full of optimistic energy. Yet with all these good intentions, your attempt to deploy a Project Management Office (PMO) is met with resistance from colleagues and fraught with difficulties in implementation. 

Why? 

Corey Spagnoli, Senior director of Continuous Improvement PMO from NCR Corporation, a PMO veteran with 13 years’ experience, talks through three of his most problematic examples of PMO rollout in IT and Continuous Improvement environments, and the critical success factors involved. Corey talks us through his PMO deployment mistakes, demonstrates the pitfalls to avoid, and shows us how to overcome the difficulties, becoming one of our PMO rollout success stories. 

Corey’s advice is to consider three key elements for a successful PMO rollout:

    1). Understand the needs of the business

    2). Match to the business culture

    3). Build in flexibility

    Read about the three key elements in more detail here. Full article here.

    Tuesday Jun 17, 2014

    Why Time-to-Market is Critical for Today's Automotive Suppliers

    After years of slumping sales, the auto industry is rebounding at an unprecedented pace. Auto parts and components suppliers, who were equally battered, now face the challenge of quickly retooling and re-staffing to regain status with OEMs.

    This White Paper looks at the current trends and how automotive suppliers can get back on the fast track.

    Learn how automotive suppliers can position themselves to help OEMs meet their new model goals.

    About

    Information and insights on project portfolio trends and best practices, including cloud project management.

    Stay Connected

    Twitter

    Search

    Archives
    « April 2016
    SunMonTueWedThuFriSat
         
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12
    13
    14
    15
    16
    17
    18
    19
    20
    21
    22
    23
    24
    25
    26
    28
    29
    30
           
    Today